Thursday, June 08, 2017

ON METAPHORS AND SCIENTIFIC LAWS

“In the same sense that Kepler’s laws of planetary motion were unscientific. Kepler described observed patterns, but were unable to derive or justify his laws. His was more of an aesthetic, even a mystical explanation than a scientific one. It was not only until Newton came along that the mechanism — gravity — was explicated. (And then we waited for Einstein to explain gravity.)

In a similar way Smith’s “invisible hand” is a non-mechanistic explanation, one that is descriptive, that fits observation, but is not derived or justified from more fundamental laws. It was for later economists, e.g., Menger, Mises, Hayek, even Samuelson, to explain the “why” behind this insight.”

My Response:

Smith used the “invisible hand as a literary metaphor. As such it was never a scientific law. The ‘invisible hand’ was largely, but not exclusively, used in theology throughout the 16th and 17th centuries.

In Smith’s case in Wealth of Nations, he observed that a ‘risk-averse’ merchant by investing his capital in the domestic economy for private gain, also and consequently added to aggregate domestic investment which was a public gain.

All the rest of the assertions about the IH being a scientific law are in error, largely invented by the gentlemen mentioned by Bob Weir, especially Paul Samuelson. Smith gave many examples of merchants pursuing their own interests whose actions were detrimental to the public good, not beneficial. For example, lobbying for tariffs and outright import prohibitions.